TAJBank, Nigeria’s leading non-interest bank, has been a serial winner of BusinessDay awards due to its stellar performance in just five years of operations. Within the first half of 2024, its gross earnings rose 93 percent to N32.85 bn, from the N17.02 bn reported in the same period of 2023. The bank has also witnessed rapid expansion in its branch network to 54 across the country, was able to break even just within three years of its operations, and has since then maintained a positive growth trajectory. Hamid Joda, founder, MD/CEO of the bank, attributes this feat to purpose and dedication, coupled with strong customer focus. In this interview, he speaks to a BusinessDay team comprising Josad Osadolor, Onyinye Nwachukwu, and Geoffrey Essien, about the bank’s achievements and strategic plans. Excerpts…
Talk to us about how TajBank has evolved within its five years of operations.
In terms of history, we’ve always been bankers, and then we saw a niche. Our last place of employment was FCMB, from where we took a decision to set up TajBank. We eventually successfully raised the capital from investors. I’m only summarising because a lot of things happened through the process of capital raising; it was a very difficult and arduous process to raise the capital. Of course, we all know how difficult it is to convince investors to believe in one’s vision and go into a business.
Thankfully, we raised the capital, and we submitted it to the central bank. That was also a very difficult process because initially the central bank rejected some of the money, so we had to go back to the drawing board to raise fresh funds. At the end of the day, thankfully, the central bank gave us an approval in principle. But I would say that when we were envisioning the dream of setting up TajBank, one of the things that we looked at was the niche in noninterest, because the most important thing for a businessman is to identify your niche from day one. If you don’t identify a niche, you will come in and just become another fringe player.
But for us, the difference was the market niche, which is non-interest, and it’s hugely underserved in Nigeria, being a different and unique model of banking. We saw that the market at that time was still very wide open, with a lot of opportunities and a lot of Nigerians yearning for that kind of banking service. We came in to fill a void, with an aggressive drive into the market. We realised that, yes, Nigerians have been yearning for the model, and we became widely accepted, especially in our primary area, because we started as a regional bank, and within two years, we got our national license.
Within the regions where we set up, we saw very, very rapid growth; we saw a lot of consumers gravitating from conventional and other banking models into non-interest that today in our regions of operation, we are a dominant bank to reckon with. Therefore, I think that identifying a niche is vital to any new business. That was the dream. Like I said, there are still opportunities in the non-interest space, and I don’t think we have scratched the surface; the bank is still growing.
Someone asked me the other day about our biggest achievements as a bank. And I said one of them is taking non-interest banking in Nigeria from the fringes to the mainstream. This is because before we set up the bank, there were so many misconceptions that, oh, if you are not a Muslim, you can’t work in a non-interest bank, or, if you are not a Muslim, you can’t benefit from a non-interest facility. But in one year, and leading up to two years, people started seeing that it’s not about your background or ethnicity or religion or any of those things; it’s a business model, and one that is unique, that adds value to your business, that enables you to plan better than any other banking model. I can go on and on and describe the various models.
“We saw that the market at that time was still very wide open, with a lot of opportunities and a lot of Nigerians yearning for that kind of banking service.”
And so in our recruitment process, in our interactions with people, we created a very liberal environment where people feel free to work no matter your background. And of course, even in terms of financing, some of which is about supplying assets that we’ve created, a lot of people from different backgrounds came in and are now benefiting. So I believe we have changed that misconception in the minds of Nigerians. In fact, some of my friends who are inspired by what we’ve done and want to set up non-interest banks are Christians, and I encourage them. At the end of the day, it’s not about religion and all of that, so I think that is a major achievement. And I believe that non-interest will be part of the mainstream banking system.
Read also: Hamid Joda – Leading TAJBank’s impressive and steady growth
What would be your projection for the non-interest banking ecosystem in Nigeria in five years?
The vision is for the industry to continue to grow and for TajBank, particularly, to be a Tier 2 bank, a dominant player in the banking industry. And I am saying this because if you look at our compound annual growth rate, it’s higher than what you find in any other banking model, whether it is conventional or micro finance. This particular segment of banking is growing faster than any other model. I believe we will become a dominant force to reckon with in the financial system. If you look at the statistics today, we are just about maybe one or two percent of the banking industry. That is very, very insignificant. If we take, let’s say, 10 percent of the banking industry in the next five years, I think it would be a very big achievement for non-interest banks and, of course, for Nigerians to also begin to switch to this model of banking, where it is easier for you to plan as a business.
“In the last five years, we’ve grown our capital by over 900 percent, almost 1,000 percent.”
One of the perils of doing business in Nigeria is the uncertainty in the market environment. Let’s say you take a loan today, and because of the uncertainties in the operating environment, you are unable to pay that loan; interest keeps spiralling out of control. That could be catastrophic for a businessman. But if you take a non-interest facility, what you see is what you get; if you take a 100 million facility, and for whatever reason you are unable to pay in the next 20 years, that 100 million will remain 100 million. So you can see that from day one, you are able to plan ahead, and it becomes easier for you as a business person. So there are so many advantages to this model that we are selling to Nigerians, and I believe by the time we create a lot of awareness, a lot of people will switch to this model of banking.
Already, we have 54 branches; in the next three years, I believe we should have a minimum of 250 branches, because we are seeing the benefits in brick and mortar, and Nigeria is still underserved. In spite of the fact that we are going through an era of digital disruption, where a lot of people are banking with digital banks that have no physical presence. Of course, that is where the future is going. Nevertheless, brick and mortar is still relevant; people still want to see physical structures. They want to see a building where they can go in and meet people and discuss. And we are seeing the benefits of physical banking, brick-and-mortar banking, so we believe it is still relevant; it will still continue to remain relevant in the next five years. That said, we are investing in digital, as well as in brick-and-mortar branching.
What would be your key expansion plans?
Like I said, our major plan is in digital banking, because the future is going digital. Therefore, while we invest in brick and mortar, we are also investing in our digital infrastructure. This is one thing that has happened in the industry over the last five years: we’ve seen a massive disruption and change in the mindset of the banking public. Nobody ever believed that in 2024, people would open accounts with digital banks and run those accounts without seeing physical presence. But it’s happening today; we have a lot of them operating in Nigeria.
The landscape has changed completely; we don’t want to be left behind, so we are making massive investments in our digital infrastructure such that even where we don’t have physical branches, our digital footprint will reach those underserved areas, and of course, we’ll be able to provide banking services to people from anywhere. That is one key area that we are looking at in terms of investment. So physical and digital—with two-pronged approaches going into the market, we believe we will unlock a lot of opportunities for TajBank.
Read also: TAJBank reports N11.3bn profit, highest of non-interest banking
What has been your greatest strength?
From day one of our starting operations, we have focused on customer service, which is the most important thing. If you don’t serve your customers well, they won’t come back, and you will have a high drop rate, a very high dormancy rate. Our dormancy rate is still quite low relative to the industry, and that’s because we are able to serve our customers well. There are so many things that complement customer service. I can go on and on about it, but the fundamental thing is customer service, which we have focused on and will continue to focus on to enable us to have a very high retention level of customers. In the last five years, we’ve grown our capital by over 900 percent, almost 1,000 percent, and the most important ratio in banking is what we call the Capital Adequacy Ratio; you cannot grow without capital. That’s why it’s important for you to keep increasing capital, bringing in fresh money into the business, so that you are able to grow and meet your ambitions and aspirations, which we would continue to do.
In the next five years, just like we’ve grown by about 1,000% in the last five years, we hope to grow by maybe, if not by that figure, by hundreds of percentages, let’s say, 500 percent growth in the next five years. And that’s because when your base increases, growth becomes less. In the next five years, we’ll possibly grow by 500 percent minimum in terms of capital. Of course, we continue to grow our capital because of the expansion plans that I have mentioned.
In terms of staffing, we have about 1500 people working with TajBank today, and hopefully in the next five years, we’ll have about 5000 Nigerian employees from all walks of life. We are dominant in the North because we started as a regional bank in the Northeast and Northwest, so our growth ambition is to go to the South. It will interest you to know that the bank has been very well received in the southern region, in the South East and South South. When we were going there, people told us there wouldn’t be a market; we insisted and said, Well, if we go there and fail, we’ll tell the story. Interestingly, we went there, and it’s been a success story. That has encouraged us to invest massively in those regions, and we are coming up with a lot of branches there.
TajBank has been a national bank for the past three years. We are in Owerri, Port Harcourt, Asaba, Uyo, Lagos, and Ibadan. We will be moving into Edo State; we acquired land there two weeks ago. We may also be looking at international presence if we cross the capital hurdle. In fact, the plan was that by this year or next, we would become an international bank, but because of the new capital huddle, it will take some time. But part of our ambition was to first have a national license and then go to other African countries.
We’ve been invited by several countries to come and set up. Someone in Niger invited us; even in Libya, some people suggested we come. A lot of countries are calling us to come in, like Cameroon, because from there, you can serve a lot of Central Africa, Equatorial Guinea, Chad, and the Central African Republic, where they have the same central bank. That is the advantage of setting up in Cameroon and having automatic entry into those markets. There are several opportunities out there, but the capital hurdle is what we need to cross. Also note that already, we have met the new capital requirement by the central bank.
TajBank has just won BusinessDay’s prestigious Outstanding Leadership in Non-Interest Banking and Financial Inclusion Award. What does this recognition mean to you and the bank?
It means a lot. Three months after we set up the bank, our head of marketing communications came to me and said, We’ve just been given an award as the best retail bank in Nigeria by so-and-so But I said, no, we are not taking that award because we are not interested in awards just for the sake of it. And every day, a lot of other institutions come here with one award or the other, best this, best that, but we keep rejecting those awards.
But when it was time for BusinessDay, we were very excited. And I called her and said, This is the kind of award that should make you happy, coming from a reputable and credible institution. I told her that we will be very happy to take this one. And more so, the award is tailored towards the industry where we operate, and we believe we’ve earned this award. It’s important that whatever award comes your way, you make sure you’ve earned it and make sure it’s coming from a reputable entity. We won it once; we’ve also been winning it back to back. This is the fourth time, and we are very, very excited. Whenever it comes and we are announced as a winner, we get very, very excited.
That is also to say, as I’ve said earlier, we only go for credible awards because we are in the reputation business. The most important thing in this banking business is reputation. If you lose your reputation, you are gone. So for us, we think it’s a partnership, maybe made in heaven. Thank you for considering us worthy. We are not the only non-interest bank in Nigeria; there are others—four stand-alone, non-interest banks. And for you to have considered us worthy of such an award, it’s really an honor. Therefore, it’s also a burden because sometimes it’s easy to become number one, but you need much more effort to sustain it because we will not want to hear that some other bank has taken it from us. That would be a concern, meaning we would then need to go back and check our systems and processes. That’s the kind of weight that we have on our shoulders, and by the grace of God, we will not let you down. We will not also let the market down, and we’ll continue to do the things that promote non-interest banking in our country.
We are very passionate about Nigeria, and that’s why we put up big flags wherever we go. And some people may not know about us yet, but whenever they see a big flag, they know that there is a TajBank there. I assure you that we will do everything possible to remain at the top.
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